Posted on 11/02/2017 7:21:40 AM PDT by GIdget2004
House Republicans will propose limiting the deductions for mortgage interest and state and local taxes in the tax bill they are releasing on Thursday, according to a summary of the legislation obtained by The Hill.
The bill, called the “Tax Cuts and Jobs Act,” largely follows the parameters that GOP leaders and the White House outlined in September. It would reduce the number of individual tax brackets, slash rates for businesses and eliminate a number of tax breaks.
In order to offset the costs of the legislation, Republicans are putting forward some proposals that are sure to be controversial.
The bill would keep the mortgage-interest deduction, but only for newly purchased homes up to $500,000. Homes bought in the past could keep the deduction regardless of price. The housing industry is sure to push back on that cap.
The legislation would also taxpayers to deduct their state and local property taxes, but only up to $10,000. It would not allow people to deduct state and local income or sales taxes.
Blue-state Republicans have fought to preserve that deduction, which is important to their constituents. It’s not clear how receptive they will be to the compromise.
“I’m still analyzing it, but right now, I’m strongly leaning no,” Rep. Pete King (R-N.Y.) said.
Several other controversial ideas that were floated to help pay for the bill, including limits on pre-tax contributions to 401(k) plans and including repeal of ObamaCare’s individual mandate, were apparently not included, according to the summary.
(Excerpt) Read more at thehill.com ...
As a resident of the People's Socialist RepuliK of Illinois I think I'm pretty qualified to comment here.
First, you're right: None of the 34 Republican House Members will vote for it (and neither will any Democrat in the above states either, btw) which would effectively kill President Trump's proposed Tax Reform.
Second, you're right: people like me in Illinois would get hammered even more, tax wise. Allow me to expand on that point while I'm at it:
This may be the impetus needed for voters in high tax states to make changes in their state legislatures and gubernatorial offices. Maybe that's the goal here too. What President Trump is trying to do from a tax perspective to improve the OVERALL business climate in the United States is to reduce the FEDERAL Tax Burden.
If high tax states such as the one that I currently live in can't get their fiscal houses in order two things are going to happen: (1) their populations will continue to decrease (as Illinois is doing...) and (2) Their tax burdens will become so overbearing the state will implode from its overburdensome debt.
Illinois is already imploding and under these conditions no business in its right mind would move here. This tax reform will simply accelerate the implosion and I say GOOD! Like an alcoholic that needs to hit bottom before finally stopping drinking, Illinois liberal politicians need to run out of other people's money and not be able to borrow any more before this state frankly gets its financial shit together.
The impetus being the Trump Tax Reform making living here even more costly which may be the final straw that breaks the voters backs in this state to throw all the worthless bums out of office.
I don't see this as a bad thing even though yes, I'll get hammered tax-wise if I continue to live in this state. I'm close enough to the Indiana border that I can pick up and vote with my feet and my dollars and leave Illinois which is what I'll do.
I say bring on the tax reform!
From the text:
the current seven tax brackets would be consolidated and simplified into four brackets: 12 percent, 25 percent, 35 percent, and 39.6 percent, in addition to an effective fifth bracket at zero percent in the form of the enhanced standard deduction. For married taxpayers filing jointly, the 25-percent bracket threshold would be $90,000, the 35percent bracket threshold would be $260,000, and the 39.6-percent bracket threshold would be $1 million. For unmarried individuals and married individuals filing separately, the bracket thresholds would be half the thresholds for married taxpayers filing jointly, except that the 35percent bracket threshold for unmarried individuals would be $200,000. For single parents filing as a head of a household, the bracket thresholds would be the midpoint between the thresholds for unmarried individuals and married taxpayers filing jointly, except that the 39.6-percent bracket threshold for heads of household would be $500,000. These income levels would be indexed for chained CPI instead of CPI, a slightly different measure of inflation.
For high-income taxpayers, the provision would phase out the tax benefit of the 12-percent bracket, measured as the difference between what the taxpayer pays and what the taxpayer would have paid had the income subject to the 12-percent bracket instead been subject to the 39.6percent bracket. This tax benefit is phased out at a rate of $6 of tax savings for every $100 of adjusted gross income in excess of $1,00,000 (single filers) or $1,200,000 (joint filers). These thresholds are adjusted for chained CPI in tax years after 2017.
The provision would be effective for tax years beginning after 2017.
(Interested because you sound like you’re in just the kind of situation the bill writers wanted to ameliorate.)
If your itemized deductions are greater than $24k - you can still itemize.
If your itemized deductions are less than $24k - you can take the $24k standard deduction and won’t have all the fuss of documenting your deductions with receipts and forms.
Will delve deeper into it, but this looks better than I had feared.
Tax hikes are never good. Tax hikes on voters to pay for cuts on corporations is stupid. The GOP will get nailed by this.
If they double the std deduction then I wil no longer itemize because the std duction is higher than my itemized deductions which is good.
I would like to see a comparison of Joe Anybody’s tax return-—with current rules side by side with proposed rules.
That would explain this much better for the average person who can barely keep their checkbook straight.
Alot of people don’t even know the difference between exemptions & deductions.
Ok thank you.
I’m totally screwed.
Sigh.
central_va
I get what you are saying....but as an example my itemizations were in and around 24k so whether I itemize or take the new and improved standard deduction is a wash to me. What I do receive though in 2016 was 21k in personal exemptions which are now being eliminated. Also, the increase in child credit is hogwash as it starts to get phased out anyways in and around what my wife and I make. So again, what benefit is this to me even if we take into consideration that our taxable income after deductions goes from 15% to 12%? I see this as a tax increase....am I wrong?
Capping property, state, and local deductions combined at $10K and eliminating the personal exemption is a massive FU to families in high tax states.
???
I thought Steve King was one of the good guys (except for his weird cRuz campaign love). Did you mean Peter King?
Gotta come up with an extra $2+K by April - as my hubby retires in January.
Is this how WINNING feels?
Oh no!
Well, don’t give up hope, it looks to me like the Kabuki script for this is for the Senate to put in relief for families. Rubio is already calling for an increase in the Child Tax credit. (sounds like that may not help you, but IMHO there’s more help to come for you.)
Why?
Why would it move the needle at all?
Here is the thing.
I have recently worked at two different plants in two different industries. Close to the same number of employees. Plant A had an EBITA of $5 million, Plant B has one of $60 Million.
They are both located in the same area, both have the same labor pool.
Plant A paid its workers better. They had a union. Plant B is having a record year, yet is cutting health insurance (again), vacation time (again), and lots of other cuts.
Having more money coming in is not going magically make any company give out raises, hire more, reduce consumer prices, or spend capital. More money WILL let upper level executives have larger bonuses and corporate headquarters a spiffy new cafeteria (which was nice).
I have been in the game to long to believe the snake oil. A bunch of “consultants” will arrive and announce “Wages really don’t have any bearing on retention. And you should replace the workforce every 18 months anyway! Oh, and cut 10% of the employees off the top and you will make more money!”
Simply put, there is little incentive for a large corporation to change anything just because they have more money. Costs are passed on, savings are banked. Taxing consumers MAY result in people buying less, but the way the US treats credit these days I doubt it.
Other than Long Island and Westchester. A $500,000 home in NYC is around $4k in property taxes. The family living in that home would probably pay $7k-$10k in local including me tax plus state tax. Upstate property taxes are real low from what I’ve seen.
“This may be the impetus needed for voters in high tax states to make changes in their state legislatures and gubernatorial offices. “
You know damn good and well we’re outnumbered and don’t stand a chance of changing the state government.
With mortgage interest for many no longer deductible, property, local, and state tax deduction capped at $10K (which is way too low for states like NJ or NY), repealing itemized deductions for medical expenses, repealing the tax deduction for student loans, and all the rest - it would be a miracle if this bill didn’t screw over millions of middle class households, regardless of where the brackets fall.
That wouldn’t be hard to do, but we don’t know enough details yet to do it.
Exemptions are tied to the number of people in your family. 4 people, 4 exemptions. There are exceptions if you’re blind, 65+ or older, etc.. but by and large, they are tied to the number of people living in your house. Think of it as an “allowance”.
Deductions vary based on the nature of your income and many other facts of your life not to mention whether you itemize or take the standard deduction. Deductions generally have no limits whereas exemptions are capped.
Depending upon your income level, both deductions and exemptions could be totally or partially phased out.
This plan will hurt someone like me. My wife and I both work and both do well. In the eyes of the tax code, we are “rich”. But we have 4 children and live in a modest home in an expensive area. We are rather far from “rich” and our ability to earn what we do is based directly upon where we live.
I’ve long argued that the tax code should be geographically indexed. The cost of living in Dubuque Iowa simply isn’t as high as NY or NJ etc... Earning $60K here and you’ll be struggling to make ends meet living in an apartment. Two people each earning that in middle america I’d bet are doing fairly well. The Federal Government pays more to its employees based on geography. We could arrange a fair tax code along those lines. But it’s a pipe dream.
Who said the $4,050 per person exemption is going away? (Ref. Line 42 Form 1040)
If it stays where that is projecting its going to hit the middle class pretty solidly. We will have to wait & see how it shakes out.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.